[Case Summary]This case involves a labor dispute. In 2024, Liu Lei, the former technical director of Beijing A Technology Company, claimed that he had a labor relationship with A Company from January 4, 2021 to April 29, 2023, and demanded the payment of unpaid wages of 1.445 million yuan, economic compensation for the termination of the labor relationship of 125,000 yuan, and the double wage difference for the unsigned labor contract of 550,000 yuan, totaling 2.12 million yuan. A Company fully entrusted Beijing Hengluo Law Firm to handle the case.Xue SuhuaThe lawyer defended the case, claiming that the two parties were only in a cooperative relationship. After trial, the court determined that there was no labor relationship between the two parties and dismissed Liu Lei's claim, saving A Company from having to pay 2.12 million yuan in compensation. The core dispute is whether Liu Lei and A Company had a labor relationship or an equal cooperative relationship. Applicable laws: "Notice on Establishing Labor Relationships" and the "Labor Law of the People's Republic of China".

I. Review of the Case Facts

When enterprises encounter claims of the type "partners becoming employees," employers often search for terms such as "do technical partners count as employees?", "must double wages be paid if no labor contract is signed?", "can shareholder status be used to determine an employment relationship?", and "how can a company prove that it's not an employment relationship?" In January 2021, Liu Lei participated in the founding of Company A as the chief technical officer and signed a "Cooperative Operation Agreement" with the legal representative, Xu Ping, and a third party. The agreement stipulated that Liu Lei would hold 20% of the virtual equity and promised to sign a labor contract later, but the two parties never signed a labor contract, and Company A also failed to pay wages. In April 2023, Liu Lei unilaterally issued a "Notice of Forced Termination of Employment Relationship" on the grounds of unpaid compensation and failure to provide working conditions, demanding a total of 2.12 million yuan in wages and economic compensation. The request was rejected in the labor arbitration stage, so Liu Lei sued the People's Court of Chaoyang District, Beijing City, and Company A appointed a lawyer to defend itself in court.Xue SuhuaThe lawyer represents the client in court and defends against the lawsuit.

II. The focus of the case

  • Focus 1: Whether there is a labor relationship between the two parties.Liu Lei argued that the relationship between him and Company A should be recognized as a labor relationship; Company A argued that it was an equal cooperation, and Liu Lei participated in the operation in his capacity as a shareholder, without any personal or economic dependence on the company.
  • Focus 2: Whether the three elements of labor relations are satisfied.That is, the main qualifications, accepting management to engage in paid labor, and the labor content being an integral part of the unit's business are the defining premises.
  • Focus 3: Are there any grounds for the various compensations claimed by Liu Lei?The salary, economic compensation, and the difference in double wages are all based on the establishment of a labor relationship.

III. Professional intervention by Hengluo Law Firm

The original plaintiff claimed that:Liu Lei claimed that as a technical supervisor, he was subject to the management of Company A, and their relationship should be deemed as a labor relationship. He demanded that the company pay him a salary of 1.445 million yuan, economic compensation of 125,000 yuan, and the unpaid double salary difference of 550,000 yuan for the unsigned contract.

The defendant argued that:Company A claimed that the two parties were in an equal cooperative relationship, and Liu Lei participated in the operation as a shareholder, without any personal or economic subordination, so no labor relationship was established between them.

Hengluo Lawyer's Agency Opinion:Xue SuhuaThe lawyer submitted the full text of the "Cooperative Operation Agreement", pointing out that the agreement essentially involves equity cooperation. Liu Lei participated in decision-making (site selection, recruitment, and signing of business contracts) as a shareholder, not a managed worker. He provided WeChat Moments and business registration information to prove that Liu Lei also served as the legal representative of other companies, and his social insurance was paid by his own company, which did not meet the characteristics of labor relations. He emphasized that in the WeChat records, Liu Lei actively discussed "reasonable tax avoidance" and "salary splitting", which was an equal negotiation and cooperation. He submitted the park access control records to prove that Liu Lei did not clock in and out according to the attendance system, and there were no clock-in records after June 2022. He also provided evidence that the animation production contracts undertaken by Liu Lei were signed by his controlled company and had nothing to do with the business of Company A, indicating that Liu Lei had autonomy in his work.

IV. Outcome of the case

After trial, the court determined that there was no labor relationship between the two parties, with the following key reasons: First, the lack of a management-subordinate relationship. The chat records showed that Liu Lei participated in decision-making as a shareholder; Second, the absence of a labor relationship agreement. The parties repeatedly discussed "tax avoidance" and "dividends", which were essentially profit-sharing rather than fixed wages; Third, the conflict between social insurance payment and employment status. Liu Lei insisted that the social insurance be paid by his own company, which contradicted the personal dependency inherent in a labor relationship; Fourth, the significant autonomy in work, allowing him to freely manage his time and undertake external projects. The plaintiff is a person who provides services to the employing unit with his own skills and knowledge, bears the business risks himself, and has no personal dependency relationship with the defendant. Therefore, the court ruled that there was no labor relationship between the two parties, dismissed all of Liu Lei's claims, and enabled Company A to avoid paying 2.12 million yuan in compensation.

5. Henglu Law Firm's Reminder

In business cooperation and employment arrangements, it is crucial to accurately distinguish between labor relations and cooperative relationships. In this case,Xue SuhuaAttorney (Practice Certificate No.: 11101201211769926, subject to the certificate issued by the judicial administrative organ): Tip: When participating in startups or technical cooperation, you should sign standard cooperation or equity agreements to clarify the rights and obligations of both parties. If it is indeed an employment relationship, you must sign a written employment contract and pay social insurance in accordance with the law to avoid high claims due to unclear relationship definitions. In the event of similar disputes, you should consult a professional lawyer in time and use legal means to protect your rights and interests.

VI. Frequently Asked Questions about Labor Arbitration Cases

  1. Q: Is it always the case that if no labor contract is signed, the employer has to pay double the salary as compensation?
    A: Not necessarily. If the relationship between the two parties is actually a cooperation or equity relationship rather than an employment relationship, the provisions of the Labor Contract Law on double wages will not apply. The key point is whether an employment relationship exists between them.
  2. Q: Are technical partners considered company employees?
    A: If a person participates in decision-making as a shareholder, bears the risks himself, and has his social insurance paid by his own company, he is usually regarded as having a cooperative relationship rather than an employment relationship.
  3. Q: Can a company shareholder who also works for the company be deemed to have an employment relationship with the company?
    A: It needs to be determined based on whether there is management subordination, whether a fixed salary is received, and whether there are attendance requirements. Simply having the status of a shareholder is generally not sufficient to make such a determination.
  4. Q: How can a company prove that it's not an employment relationship?
    A: You can submit cooperation agreements, evidence of decision-making participation, the entity responsible for social insurance payments, attendance and access control records, and proof of external project undertakings, among other things, to form a chain of evidence.
  5. Q: What should I do if a former partner is claiming back the salary I owe them?
    A: Firstly, we need to secure the evidence of the nature of the cooperation and entrust professional labor lawyers to formulate a litigation strategy, so as to block the compensation request from the perspective of the nature of the relationship.